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Gov’t to allow foreign companies to import food items

The government of Ethiopia has decided to allow foreign companies to import basic food items including wheat, edible oil and sugar to ease the burden of souring inflation rate.

Reliable sources told The Reporter that the Ministry of Finance will soon issue an Expression of Interest (EoI) inviting foreign companies, which are interested in supplying wheat, edible oil and sugar to the country. The Ministry will evaluate the proposals that will be presented by the companies and shortlist those that qualify.

The shortlisted companies will be selected by a committee composed of representatives from the National Bank of Ethiopia (NBE), Ministry of Finance, Ministry of Trade and Industry and the Ethiopian Investment Commission. Upon selection, the companies will be licensed to wholesale the food items to the local market.   

The Ethiopian government buys wheat, edible oil and sugar through competitive bids and distribute to the public with subsidized prices. Few local private companies have dominated the import of edible oil. Sources told The Reporter that these basic food items stir inflation in the domestic market. “The cartels reap as high as 100 percent profit margins on these consumable items and the government wants to end that bad business practice,” sources said.

Accordingly, through competitive bid process the foreign companies will be able to wholesale wheat, edible oil and sugar to the local market through government distribution channels.

The Ethiopian government recently imported four million quintals of wheat to combat the galloping inflation. The prices of food items, mainly wheat and other grains, have soared since June 2019.  

Inflation rate on food items was reported to have reached 19.6 percent in June and 20.1 percent in July 2019. Similarly, the prices of edible oil and sugar have increased in the past successive months. According to the Central Statistical Agency’s price index report, which was published in August 2019, the headline inflation reached 15.6 percent, a record high in five years’ time. 

A latest price index report, which is yet to be published by the agency the country level overall inflation rate (annual change based on 12 months Moving Average), rose by 14.1 percent in October 2019 as compared to the one observed in a similar period a year ago. The country level food inflation increased by 16.8 percent as compared to the one observed a year ago.

Currently, Ethiopia spends annually around one billion dollars on wheat and fertilizers imports. The Ministry of Agriculture had announced plans to end wheat import by introducing mechanized farming and helping small-scale farmers engage in irrigation agriculture.